The Merge Settled In, America’s First-Ever Crypto Framework, and More!

Markets dipped shortly after US CPI data came out to indicate inflation has risen by 0.1% to make the annual rate climb to 8.3%. As of writing, Bitcoin is down by 15% over the past week, and although the Merge settled in Ethereum is down by 26%. Moreover, returns on Ethereum’s scalability solution Optimism declined by 35.5%, while those on Lido declined by 20.5% and its TVL is down by 25.5%.

Figure 1: TVL and price development of major crypto sectors

Source: 21Shares, Coingecko, DeFi Llama

Key takeaways

• The US publishes its first framework for regulating cryptoassets
• ETH is POS, Infura decentralizing the infrastructure layer
• DeFi blue chips are consolidating their ecosystems
• OpenSea launches OpenRarity to give smaller projects more exposure

Spot and Derivatives Markets

Figure 2: Ethereum Liquidations in the Futures Market

Source: Coinglass

Since the announcement of CPI data on September 13 followed by the Merge, there has been a total of around $500M in liquidations of Ethereum positions, with longs having the biggest share as shown in Figure 2.

On-chain Indicators

Figure 3: Ethereum’s Network Value to Transaction Signal

Source: Glassnode

The NVT Signal (NVTS) is a modified version of the original NVT Ratio, using a 90-day moving average for transaction volume, instead of the raw daily transaction volume, making it function better as a leading indicator. NVTS in Figure 3 indicates that ETH’s ratio reached the same level as the prior bear market around June 2018. At that time, ETH was valued at $73.9B which is currently 45% of today’s value while the daily number of transactions on the number today is 1.5x as much as the last crypto winter. In other words, ETH value increased significantly more than its fundamentals.

Next Week’s Calendar

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Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com

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